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Lawmaker offers new approach to price carbon in US

Date:06-Aug-12Country: USAAuthor: Valerie Volcovici

A Democratic congressman made the latest attempt to set a national price on carbon on Thursday, floating a bill that would force companies to pay for their emissions, while using proceeds to help reduce the budget deficit and offset any price increases for consumers.

In the wake of recent debates in Congress over the past few days on climate change and news of high-profile Republicans voicing support for a carbon tax, Democratic Congressman Jim McDermott introduced the Managed Carbon Price (MCP) act as a way to address climate change in an "economically responsible way."

"My bill would reduce carbon emissions, and it returns all the money to consumers and deficit reduction," said McDermott, a member of the House's tax-writing Ways and Means committee.

"Businesses want this kind of predictability, consumers need to be protected, and we need to step up and address our climate and fiscal issues."

The bill creates a schedule that would put the U.S. on a path to reduce CO2 emissions by 80 percent below 2005 levels within 42 years of enactment - in line with the target set by President Barack Obama.

The bill also directs the Treasury secretary to publish a five-year permit price schedule and to issue federal emissions permits that represent one-quarter ton of CO2 equivalent to emitters.

"The MCP is unlike a traditional carbon tax, because the MCP creates a flexible price system that provides certainty by accounting for volatility in the energy markets, requires specific emissions reductions, and addresses any increase in energy costs with dividend payments to the public," according to a bill summary.

Like previous "cap-and-dividend" proposals that have been floated by senators during the last Congress, the bill would call for 75 percent of revenues to be returned to consumers in the form of a monthly dividend and the remainder to go toward direct deficit reduction.

NEW ATTEMPT

The bill is the newest attempt to revive the idea of pricing carbon during a season of extreme temperatures and widespread drought in the U.S.

Inglis has been an avid supporter of a plan to raise taxes on fossil fuels, such as coal, that emit climate-warming carbon dioxide when burned -- while cutting income tax, a concept also supported by former Democratic Vice President Al Gore.

He launched the initiative in the same week that the conservative American Enterprise Institute (AEI) co-hosted a meeting with the liberal Climate Crisis Coalition (CCC) to discuss the feasibility of a national carbon tax.

But passing a bill that would set a price on carbon either is an unlikely prospect with the presidential elections looming and vehement climate policy opponents remaining in office.

"We've been through this debate for years and the American public has rejected an energy tax every time," said Republican Senator James Inhofe.

"It's time for my friends on the other side of the aisle finally to get through the grieving process on cap-and-trade, move on from these failed, dead policies, and begin to embrace the enormous potential of America's abundant energy resources."